Potential mass exodus from Spreadbetters.

[Lee Shepherd]

Hi FXX,

HMRC are fully aware of my situation and my winnings and have been for decades. I've been posting bank statements and betting statements on here since 2008 and am fully transparent, that includes with HMRC. I only pay the tax I have to. If anyone else wishes to pay more than they do, then feel free.

@ Brumby - Thank you for your private message. However, I will only discuss such matters on the public forum and that will be at my discretion. If you wish, you can share your message (unedited and in full) with the forum. This keeps everything transparent.

Ultimately people will believe what they wish to, however, the proof is in the pudding. Once a spread bettor, gambler or trader starts to lose or make money, they should declare this to HMRC and see if they can get a tax rebate, off set losses or pay tax on their earnings/winnings.

Good day to all, now lets all get winning some money.

Lee

 

[new_trader]

Pay your tax!

But your view of this doesn't match what's on the mhrc site


"However, an organised activity to make profits out of the gambling public will normally amount to trading.
Although over time new forms of games of chance have evolved, these principles remain the same. The taxpayer placing a spread bet is not normally carrying on a trade (see*BIM22020*for exceptions). They are not taxable on the profits, nor do they receive relief for their losses. The bookmaker organising the spread bet is taxable on their profits."

"The principles of Down v Compston [1937] 21TC60 and Burdge v Pyne [1968] 45TC320 (see*BIM22019) apply equally to spread betting. To be taxable, the spread betting wins must come not merely from an opportunity presented by a trade, they must arise from the carrying on of that trade. Whether or not a particular spread bet is taxable will depend on the terms of the contract and the economic substance of what is done".


When I read this to me it translates into spread betting in a professional capacity is taxable.


Here is a case referenced on the hmrc site

n Burdge v Pyne [1968] 45TC320 the proprietor of a registered club which provided gambling facilities, including a card room, won considerable sums of money from three-card brag which he played regularly with members in the card room. He was taxable on his gambling winnings.

Sent from my SM-G950F using Tapatalk

I think some people live in denial. I've always believed that if profits from spread betting is your sole source of income it is taxable.

As you quoted from the HMRC website:

"However, an organised activity to make profits out of the gambling public will normally amount to trading.
Although over time new forms of games of chance have evolved, these principles remain the same. The taxpayer placing a spread bet is not normally carrying on a trade (see*BIM22020*for exceptions). They are not taxable on the profits, nor do they receive relief for their losses. The bookmaker organising the spread bet is taxable on their profits."

It clearly states "The Taxpayer" meaning that spread-betting isn't their full time profession.

 

[Lee Shepherd]

I'll leave this conversation with the following: (as it will go on for years)

When a person starts trading, spread betting or gambling, win or lose, makes or loses, earns or not. Check with HMRC (or taxation in your country of residence) whether or not you are liable to off set taxes, get a tax rebate or pay tax. Simple.

We can all discus this till the cows come home or simply speak with HMRC if you think it affects you. Obviously if you are speaking to them to raise debate but yet are not making or losing any money, then your personal efforts would be best spent on learning how to make money from the markets or win from the bookies. Instead of talking about 'what ifs'.

'What if I make money', will I be taxed? If you are winning money spread betting you will know this answer.

If you believe or are unsure you will be taxed, just tuck a suitable percentage of cash away to pay if they do tax you. If you are taxed, you pay the money you stashed, if they say you are not liable for tax on your winnings then happy days. Everyone's a winner baby.

All the best,

Lee

 

[Lee Shepherd]

@ FXX

I'm loving your journal and your efforts to succeed. You seem to be doing very well and on the right path. I can't private message you as I think you have this turned off but if you need any help at all (on any matters including tax related), let me know.

Lee

 

[new_trader]

@Lee: I think you are missing the point. I am not debating about a hypothetical "someone" spread-betting. As it stands right now, I know I don't need to pay tax on my spread-betting profits whereas I think you should be paying tax.

 

[barjon]

I think some people live in denial. I've always believed that if profits from spread betting is your sole source of income it is taxable.

As you quoted from the HMRC website:



It clearly states "The Taxpayer" meaning that spread-betting isn't their full time profession.

NT

If you read BIM22017 in my earlier post you will see it concerns someone whose sole means of livelihood comes from betting. It’s tax free. I doubt that HMRC are in denial about it.

 

[NVP]

hey gang

Forexmospherian wrote a lot about this as well a few years back ...and i have had experience of dealing with HMRC regarding taxable trading and Gambling profits over the years.

the crux of it is really is that many forms of gambling etc attract some up front taxation anyway......so the taxman has taken already his pound of flesh from normal punters and traders who do it as a hobby or sideline....as long as it stays that way they will stay off your back

if you start making trading / Gambling income that is in excess of your primary job or business ...then they come calling .......and especially if you have pretty low levels of alternative income to the gambling/trading income you are generating on a regular basis

they will define you as in the business of Gambling/Trading and therefore a sole trader and tax you accordingly, NI and the works

so dont p*ss them off .........you will not win i assure you

if you get to that stage just embrace it .....formalise and recognise your trading as a business and get on with it ....as the HMRC have already !

no free lunch in UK

N

 

[FXX]

@ FXX

I'm loving your journal and your efforts to succeed. You seem to be doing very well and on the right path. I can't private message you as I think you have this turned off but if you need any help at all (on any matters including tax related), let me know.

Lee

Thanks for the vote of confidence Lee, having a professional trader remark as you have gives me confidence that i am on the right path in an ocean of smoke and mirrors.

 

[tomorton]

Long ago I discussed paying tax on SB winnings with my then accountant. His advice was, if I could convince HMRC to accept SB as self-employment, I should go ahead and count myself the luckiest punter alive.

The accountants took the same view as HMRC, that no matter what level of income or what sort of time you put into SB, this would never be accepted as income taxable by HMRC because eventually, you would become a loser and would seek to reclaim tax back to cover losses.

Meantime of course, the SB punter who does not pay income tax is not getting off without paying ANY tax. The SB firm pays tax based on their revenue and profits like any other firm, and the more I deposit and win through them, the more tax they pay. The tax they pay comes from their customers, and that includes me.

 

[FXX]

It seems to be a case of divergence in what HMRC state as there being a avenue in spreadbetting that is taxable, accountant opinions, and personal experience.

What springs to mind is the governments ability to alter their wording and backdate their new policy at the expense of those that thought they were inline with policy albeit somewhat a grey area based on their own wording.

I think this debate is like Marmite where there will always be opposite opponents.

 

[barjon]

hey gang

Forexmospherian wrote a lot about this as well a few years back ...and i have had experience of dealing with HMRC regarding taxable trading and Gambling profits over the years.

the crux of it is really is that many forms of gambling etc attract some up front taxation anyway......so the taxman has taken already his pound of flesh from normal punters and traders who do it as a hobby or sideline....as long as it stays that way they will stay off your back

if you start making trading / Gambling income that is in excess of your primary job or business ...then they come calling .......and especially if you have pretty low levels of alternative income to the gambling/trading income you are generating on a regular basis

they will define you as in the business of Gambling/Trading and therefore a sole trader and tax you accordingly, NI and the works

so dont p*ss them off .........you will not win i assure you

if you get to that stage just embrace it .....formalise and recognise your trading as a business and get on with it ....as the HMRC have already !

no free lunch in UK

N

Did you not read my post above yours? BIM22017 is the legal precedent put forward by HMRC themselves. See it from the link in my earlier post although you might have to scroll down a post or two.

I repeat, it’s only taxable at the moment if it is deemed to be part of some other taxable business activity. Such as bookmaking, or maybe selling a trading system.

FXMO was either engaged in such activities or his claim to have been taxed was as much a fantasy as most of his other posts.

 

[wallstreetwarrior87]

I spoke at length about this about 3 years ago with 2 colleagues whom are in the legal profession.

Simply put - they would happily take any client on and defend them in any case brought against their client if "gambling" was the term used and always had been used in defining their ability to obtain income.

They went on to add:

Find just one case where a high earning individual has been forced to pay taxation on spread betting income. Just one😕

Just one?

 

[barjon]

It seems to be a case of divergence in what HMRC state as there being a avenue in spreadbetting that is taxable, accountant opinions, and personal experience.

What springs to mind is the governments ability to alter their wording and backdate their new policy at the expense of those that thought they were inline with policy albeit somewhat a grey area based on their own wording.

I think this debate is like Marmite where there will always be opposite opponents.

Bloody hell. Maybe it might help convince you to know that of all the endless discussions on here no-one aside from the Walter Mitty FXMO (since banned) has said that they have been taxed.

 

[Brumby]

If you read BIM22017 in my earlier post you will see it concerns someone whose sole means of livelihood comes from betting. It’s tax free. I doubt that HMRC are in denial about it.

Forexmospherian wrote a lot about this as well a few years back ...and i have had experience of dealing with HMRC regarding taxable trading and Gambling profits over the years.

the crux of it is really is that many forms of gambling etc attract some up front taxation anyway......so the taxman has taken already his pound of flesh from normal punters and traders who do it as a hobby or sideline....as long as it stays that way they will stay off your back

if you start making trading / Gambling income that is in excess of your primary job or business ...then they come calling .......and especially if you have pretty low levels of alternative income to the gambling/trading income you are generating on a regular basis

they will define you as in the business of Gambling/Trading and therefore a sole trader and tax you accordingly, NI and the works

so dont p*ss them off .........you will not win i assure you

if you get to that stage just embrace it .....formalise and recognise your trading as a business and get on with it ....as the HMRC have already !

no free lunch in UK

N

You should also read BIM22018.
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22018

While spread betting may not be taxable, the business activity of spread betting may be. The issue is therefore what constitutes a business activity vs. a hobby. In the Graham v Green [1925] case, the discussions resolve around the notion of organised activities.

There are several Australian case laws that contrast the difference between a hobby and a business activity. Essentially it is a question of fact based on the characteristics of the activities in making a determination :
1)Is it conducted in an organised, systematic and regular manner;
2)The nature of record keeping and reporting of activities;
3)The presence of a systematic approach in risk management;
4)The adoption of research activities and outside services in decision making;
5)The reliance on the use of supporting hardware and software to conduct the activities

Whether it is a business or a hobby will be dependent on how you conduct your bets.

 

[Brumby]

I spoke at length about this about 3 years ago with 2 colleagues whom are in the legal profession.

Simply put - they would happily take any client on and defend them in any case brought against their client if "gambling" was the term used and always had been used in defining their ability to obtain income.

They went on to add:

Find just one case where a high earning individual has been forced to pay taxation on spread betting income. Just one😕

Just one?

It might not be directly related. The Australian Tax Office went after this guy. The first case against a gambler.

https://www.theadvocate.com.au/story/409944/walsh-and-friends-settle-tax-debt/

who then moved his business to the Isle of Man

https://www.smh.com.au/national/mee...est-gambler-in-the-world-20180515-p4zfhi.html

If you are big enough, the tax office will come after you. If there are no cases in the UK it just mean that there are no worthwhile targets.

 

[FXX]

Bloody hell. Maybe it might help convince you to know that of all the endless discussions on here no-one aside from the Walter Mitty FXMO (since banned) has said that they have been taxed.

Hi Barjon

Unfortunately I do not hold any credible view of retail traders on forums for the most part. It may be true that people are not being taxed but it is also true that consultants like myself are not being taxed according to IR35 even though a good chunk of the consultant industry falls within IR35. Just because they are not paying tax doesn't automatically imply they are complying with the law. It clearly states on HMRC that spread betting is taxable if it is showing to be more than a casual bet.

"A bet is merely an irrational agreement that one person should pay another person on the happening of an event."

"an organised activity to make profits out of the gambling public will normally amount to trading."

"Although over time new forms of games of chance have evolved, these principles remain the same. The taxpayer placing a spread bet is not normally carrying on a trade"

not normally , implying they could be carrying on a trade if, and here is the official HMRC wording:

"To be taxable, the spread betting wins must come not merely from an opportunity presented by a trade, they must arise from the carrying on of that trade"

Contrasting this with

"A bet is merely an irrational agreement that one person should pay another person on the happening of an event."

it is clear that they are talking about spread betting in a casual form is tax free but in a professional capacity is not.

Now however way you look at it there is scope for spread betting taxable but where there clearly seems to be similarity with IR35, it is not strictly enforced allowing professional traders, like consultants who operate inside IR35 but pay tax in accordance with being outside of it.

You can't put forth as evidence, people people on a forum who say they don't pay tax and have never been asked to pay it. This would be similar to me saying consultants that operate within IR35 but don't pay the associated tax is evidence that IR35 doesn't exist. This is a clear case of the law not being strictly enforced and in my experience this has bitten consultants who operated within guidance after which the government changed the wording slightly and subsequently backdated it years which bankrupt and destroyed many consultants lives.

In keeping with what Lee has stated. It would be prudent to set aside money in the event the government does come knocking. Denying their wording on this would be foolish and basing an argument off the back of them not enforcing it is again foolish.

I don't mean any disrespect to you or others on here on this matter. I will align myself with the general approach that it is not going to be taxed while residing on the side of caution and storing what i deem to be taxable aside. In the end i will either have a nice chunk of change one day that i could use towards future investments or i will be parting with it on tax. I would rather operate like this knowing that the government aren't going to one day decide to enforce their stance and come up short with a hefty bill owing.

 

[tomorton]

You should also read BIM22018.
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22018

While spread betting may not be taxable, the business activity of spread betting may be. The issue is therefore what constitutes a business activity vs. a hobby. In the Graham v Green [1925] case, the discussions resolve around the notion of organised activities.

There are several Australian case laws that contrast the difference between a hobby and a business activity. Essentially it is a question of fact based on the characteristics of the activities in making a determination :
1)Is it conducted in an organised, systematic and regular manner;
2)The nature of record keeping and reporting of activities;
3)The presence of a systematic approach in risk management;
4)The adoption of research activities and outside services in decision making;
5)The reliance on the use of supporting hardware and software to conduct the activities

Whether it is a business or a hobby will be dependent on how you conduct your bets.

I think its obvious that if you set yourself up as a firm offering a SB platform and SB facilities to punters, you're going to be liable to income tax. Likewise, if you sell trader training, trading software, a trading reference book, if you're paid to speak at events on trading, etc. etc. etc.

But none of this is what we're talking about.

 

[barjon]

FXX

I refer you back to the link in my earlier post 118 which goes to HMRC papers.

CG56105 describes spread betting and concludes “ ...no assets are acquired or disposed of and no chargeable gains or allowed losses arise from spread betting.”

BIM 22017 describes a professional gambler and confirms that his betting income is not taxable even if it is his sole means of livelihood. It also draws atttention to related activities that may require his betting to be included in the whole and taxable.

These papers are not drawn out of thin air. They are the guidance HMRC give you.

 

[Brumby]

I think its obvious that if you set yourself up as a firm offering a SB platform and SB facilities to punters, you're going to be liable to income tax. Likewise, if you sell trader training, trading software, a trading reference book, if you're paid to speak at events on trading, etc. etc. etc.

But none of this is what we're talking about.

I think you are missing the broader point which is the important consideration of what constitutes as a business activity as oppose to the question on the type of activity. Said differently, if the conduct of the activity is caught within the web of a business activity then the nature of the activity itself becomes secondary.

 

[new_trader]

FXX

I refer you back to the link in my earlier post 118 which goes to HMRC papers.

CG56105 describes spread betting and concludes “ ...no assets are acquired or disposed of and no chargeable gains or allowed losses arise from spread betting.”

BIM 22017 describes a professional gambler and confirms that his betting income is not taxable even if it is his sole means of livelihood. It also draws atttention to related activities that may require his betting to be included in the whole and taxable.

These papers are not drawn out of thin air. They are the guidance HMRC give you.

I am in the process of conceding...

"To be taxable, the spread betting wins must come not merely from an opportunity presented by a trade, they must arise from the carrying on of that trade"


Originally I interpreted the "carrying on of that trade" to mean full-time spread-betting. However, I now think it means if you run a spread-betting firm and also take a punt on the markets while running the firm, then your profit of your bets will be taxable because you are carrying on of that trade i.e. spread-betting firm. This is what it implies here: http://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22019